Following the changes to pension annual allowance rules announced in this years budget (covered by one of our Healthcare Partners Keith Shorten here), those who had previously opted-out of the NHS Pension Scheme may now be considering opting back in.
The NHS Pension Scheme offers a great way for members to build up their retirement benefits, and in most cases, it is going to be the best available option. However, for some, the decision to opt back in may require careful consideration and thought on various factors;
- What will happen to your previous membership when you re-join?
- Which section of the NHS Pension Scheme will you join and how might this affect your retirement plans?
- Could annual allowance charges still apply?
- Will you lose your Enhanced/Fixed Protection if you re-join?
It will also be important to
understand the benefits you have already accrued in the NHS Pension Scheme,
through your NHS Total Reward Statement, and that your NHS Pension Scheme
membership record is correct (our recent article which can be found here
gives you more information about this ).
For those that decide not to opt back in, it is important to continue saving towards your retirement and there are many different ways this can be achieved beyond pensions.
A key feature of the NHS Pension Scheme is the Death in Service and Ill Health pension benefits it provides. The level of benefits available does differ depending on whether you are opted in, or out. All members should understand the level of benefits they have through their membership and if it meets their needs. If there is a shortfall, this can potentially be made up through personal life assurance or income protection policies.
For those that decide not to opt back in, it is important to continue saving towards your retirement and there are many different ways this can be achieved beyond pensions. ISAs, whether Cash or Stocks & Shares, have long been a key form of tax-efficient savings. General Investment Accounts offer a complimentary form of saving to ISAs, whilst Venture Capital Trusts can provide similar levels of tax-relief to pensions. Maintaining a well diversified portfolio will help you to benefit from the allowances and tax reliefs available to savers.
Through the shared knowledge of our healthcare team and financial advisers, we can guide you through the choices of re-joining the NHS Pension Scheme, and help you make the right decisions for your future.